EXCLUSIVE: Scot-Govt announces 60% (temporary) discount on business rates for small hydro power sector in major U-turn

First with the news - how Scottish Energy News reported the hydro-power rates issue on 11 Sept 2017
First with the news –
how Scottish Energy News reported the hydro-power rates issue on 11 Sept 2017.

EXCLUSIVE by Scottish Energy News

Businesses owners operating in the small-hydro energy sector in Scotland were last night jubilant after winning a stunning victory over a politically-naïve business rates hike at the start of this financial year which saw some of them facing rates increases of up to 400%

Following a storm of protest and howls of economic outrage from the industry, Scottish Finance Minister Derek Mackay yesterday announced a major political climbdown in the Scot-Govt. response to the Barclay Review of Business Rates.

Announcing a range of procedural improvements to the much-loathed business rates system, he said:

“For the hydropower sector, which benefited from the cap this year, we <now> instead propose a new interim relief pending completion of the separate review of plant and machinery valuation recommended by Barclay.

“As a result we propose to set this rates relief at 60 per cent, subject to an appropriate upper property value threshold.”

In further major concessions to Scotland’s small-hydro energy sector, Mackay also announced:

  • A separate review of plant and machinery valuation, with particular focus on renewable energy and on statutory property improvements, and
  • More regular revaluations with a shorter lag from the valuation ‘tone date’ following the next scheduled revaluation in 2022.

And he agreed that a reform of the business rates appeals system ‘is needed to modernise the approach, reduce appeal volume and ensure greater transparency and fairness’.

The Scot-Govt. U-turn on business rates for the small hydro power sector came just 48 hours after Scottish Energy News first revealed that Alba Energy – the coalition of independent operators in the sector – had demanded business rates parity with small wind turbine operators.

And Alba Energy is also collaborating with the British Hydro Association in kick-starting a slothful legal appeal process involving buck-passing by Tayside business rate assessors and the Lands Valuation Appeal Court in Edinburgh – a point expressly acknowledged by the Scot-Govt in Mackay’s statement (see above).

Calum Innes, a Partner in the CKD Galbraith land agent and property consultancy, commented: “The position is that the hydro industry has suffered as a consequence of the valuation methodology adopted by the assessor in his assessment of these subjects for business rates, with the valuations calculated representing upwards of 25% of annual turnover, whilst for other commercial entities and renewable technologies the rating valuation is a much lesser proportion of turnover.

“The industry has been in close dialogue with the government on this matter and the issue has been recognised with the government granting transitional relief as a short term measure.

“The Barclay Review recognised that the Plant and Machinery Order that is the principal cause of this disparity requires review with regard to its application to renewable energy technologies and the Minister has announced (amongst many other acceptances of Barclay’s recommendations) that the Plant and Machinery Order will be reviewed, but that will require time and consultation. 

“In the interim he has announced his intention to grant a 60% discount to the hydro sector with some caveats regarding the scale of operations that this will apply to.

“I have been liaising with government as a specialist adviser to the industry acting on behalf of the British Hydro Association and Alba Hydro Group and I welcome that government has taken up my recommendations to apply de-rating which I recommended as an opportunity to effect targeted legislation to assist this sector. 

“Of course, there will be further dialogue and scrutiny of detail, but it is a most welcome move.”

Adrian Loening, Chairman, British Hydropower Association, said: “The 60 percent discount for hydro schemes is very welcome news – this was the solution proposed to Mr Mackay by the British Hydropower Association and will bring rates for smaller hydro projects down to around 10 percent of turnover, which is comparable to the rates paid by other industries.

“We are very grateful for this but will continue to press government to ensure that the discount will extend to schemes up to 5MW – which meet the UK definition of small-scale hydro.

“Longer-term, we are pleased the Scottish Government has recognised the anomalies in setting rates for hydro schemes and, with other industry organisations, the BHA looks forward to contributing to the forthcoming fast-track review of the Plant and Machinery Order which we hope will address these issues.”

The British Hydro Association is holding its UK annual industry conference in Glasgow on 8-9 November 2017.

For more information: http://tinyurl.com/y898hxdo

13 Sept 2017

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